Competing Funding Stages in Emerging VC

For emerging venture capital managers, an important early decision is whether to launch pre-seed or seed funds. Pre-seed funds offer early access to startups at their inception, capturing opportunities with higher risk and potential reward, while seed funds target companies that have begun to validate their ideas, offering a slightly more balanced risk profile and clearer growth path. But which strategy sets new managers up for long-term success?

Based on quantitative data from Decile Group’s VC Lab accelerator program for new and emerging managers, including 500+ funds that have successfully completed VC Lab between 2020 and 2024, this report breaks down how pre-seed and seed funds compare in terms of representation, sector focus and performance. By the end, you’ll have an answer to the question: Should your first funds invest in startups at their pre-seed or seed stage?

In contrast to established VC firms, which tend to lean towards later-stage investments, new managers concentrate on early-stage opportunities. Within this early-stage bracket, new managers have predominantly targeted opportunities at the Seed stage, accounting for 60% of traditional VC funds since 2020, followed by 37% of funds choosing the Pre-Seed stage, and 4% choosing other stages, such as Angel or Series A. Interestingly, while interest in Seed-stage investments has remained unchanged over the years, Pre-Seed interest has experienced slight fluctuations between 2022 and 2023, suggesting that emerging managers maintain a steady overall focus on early-stage opportunities while remaining responsive to evolving market dynamics at the very earliest stages.

In terms of fund composition, both Pre-Seed and Seed funds are predominantly led by solo GPs, with roughly 60% of these funds launched by single managers. This indicates that despite the diversification of strategies among emerging managers, there remains a strong preference for the agility and streamlined decision-making of the solo-led model within early-stage investments. This consistency suggests that even as new managers broaden their focus, they continue to value the flexibility and direct oversight that solo leadership provides during the critical early phases of startup development.

In terms of gender balance, early-stage funds are predominantly led by all-male teams, with figures ranging from 67% to 79% across both Pre-Seed and Seed funds. However, Seed funds stand out as being more diverse, with a 1.6 times larger proportion of women managing VC firms compared to Pre-Seed funds. This suggests that although male-led teams remain the norm in early-stage investing, the Seed stage is gradually offering greater opportunities for women to take on leadership roles.

In terms of geography, other than LATAM, where both Pre-Seed and Seed funds are equally represented at 46% each, Seed funds generally dominate around the globe. However, in established and maturing ecosystems, such as the US, EU, and Asia, Pre-Seed funds tend to be relatively more common, suggesting that managers in these regions are willing to take slightly higher risks by investing at the very earliest stages. This regional variation highlights how market maturity and differing risk appetites shape early-stage investment strategies.

In terms of sector focus, a similar proportion of both Pre-Seed and Seed funds predominantly opt for sector-specific strategies (approximately 77-78%). However, their priorities diverge notably. Pre-Seed funds are 1.5x more likely to invest in emerging, disruptive technologies and social impact ventures, whereas Seed funds are 1.7-2.5x more likely to prioritize more established sectors with broader market dynamics, such as sustainability, infrastructure, and healthcare. These differences indicate that while both Pre-Seed and Seed funds tend to focus on specific sectors, their investment priorities vary according to the stage of startup development and the evolving market opportunities.

On average, Pre-Seed funds tend to achieve their first close about one month faster than Seed funds, closing in roughly 8 months compared to 8.9 months. Approximately 30% of both fund types secure their first close within six months, but a larger share of Seed funds (24%) require over 12 months to close, compared to Pre-Seed funds (18%). However, this difference in closing speed may be influenced by varying target sizes, with Seed funds raising on average $11.6MM funds and Pre-Seed typically targeting around $7.6MM funds.

The larger targets of Seed funds naturally demand larger tickets from investors and therefore a longer due diligence process, which can extend the time needed to convert commitments into wires. Additionally, the higher financial thresholds involved with Seed funds may necessitate broader consensus among investors, further contributing to the delay. Overall, these performance metrics suggest that while Pre-Seed funds benefit from faster closing speeds, the more substantial capital requirements of Seed funds inherently lead to a longer fundraising process.

Within the aforementioned timeframes, a slightly higher percentage of Seed funds achieve a successful first close – 45.9% compared to 41.4% for Pre-Seed funds – which indicates that a smaller proportion of Seed funds fail to close. Additionally, Seed funds tend to raise more capital in their initial rounds, averaging $2.7MM, about 1.5 times the $1.8MM average for Pre-Seed funds. This early advantage may be linked to several factors, such as a lower risk profile at the slightly later Seed stage or the possibility that more experienced managers are gravitating toward Seed investments, though further research is needed to pinpoint the exact reasons behind this trend.

Despite this, during this time, both fund types ultimately tend to close nearly identical portions of their target sizes, averaging between 51.5% and 52.3%, and complete a similar number of rounds, with averages ranging from 2.9 to 3 closes. Overall, these findings indicate that while Seed funds may lead in early capital capture, the closing success and proportion of target sizes closed are very comparable between Seed and Pre-Seed funds.

Emerging managers generally concentrate on early-stage investments, with a preference for the Seed stage – accounting for 60% of funds compared to 37% for the earlier Pre-Seed stage. Both Pre-Seed and Seed funds remain predominantly solo-led, with about 60% managed by single individuals, reflecting a consistent preference for agility and streamlined decision-making. In terms of gender balance, early-stage funds are largely led by all-male managers, though Seed funds are 1.6 times more likely to feature women in leadership positions than Pre-Seed funds. Geographically, Seed funds generally dominate worldwide, except in LATAM where both stages are equally represented, while established and maturing markets, such as the US, EU, and Asia, tend to embrace Pre-Seed investments as well, suggesting a willingness among managers in these regions to take on higher early-stage risks.

In terms of sector focus; both Pre-Seed and Seed funds predominantly adopt sector-specific strategies (77–78%), but their priorities differ: Pre-Seed funds are 1.5x more likely to invest in emerging, disruptive technologies and social impact ventures, whereas Seed funds are more likely to target more established sectors, including sustainability, infrastructure, and healthcare by 1.7-2.5x.

In terms of performance; Pre-Seed funds achieve their first close about one month faster, on average closing in 8 months compared to 8.9 months for Seed funds. In contrast, Seed funds tend to raise more capital in their initial rounds, averaging $2.7MM versus $1.8MM for Pre-Seed funds, likely due to larger target sizes ($11.6MM versus $7.6MM) that tend to require more extensive investor engagement and due diligence. Overall, despite these slight variations in early capital capture and closing speed, both fund types ultimately close similar portions of their target sizes over a comparable number of rounds, indicating that the overall closing success is very similar.

Pre-Seed funds offer the advantage of faster closing speeds and a sharper focus on very early-stage opportunities, appealing to managers willing to take on higher risks for potentially greater rewards. In contrast, Seed funds tend to raise more capital in their initial rounds and benefit from a slight measure of validation, which can instill greater investor confidence despite taking a bit longer to close. While both fund types are predominantly solo-led and largely follow sector-specific strategies, nuances in gender representation and geographic trends reveal further differences – Seed funds, for example, are more likely to feature women in leadership and dominate globally, whereas Pre-Seed investments are also prevalent in established markets where managers are inclined to embrace higher early-stage risks.

Ultimately, the choice hinges on each manager’s risk appetite, sector priorities, regional context, and desired balance between closing speed and capital raised, making it essential to align the decision with their unique experience and long-term strategic goals.

Whether you choose the Pre-Seed or Seed investment strategy, launching a successful VC fund requires the right knowledge, strategy, and support. At VC Lab, we empower emerging managers with a structured 14-week accelerator program designed to guide you through fundraising, fund building, compliance, LP fundraising, due diligence, and more. Our intensive curriculum, global network, and ethical framework help you launch faster, smarter, and with confidence.